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Hydrogen-powered Car Makers Suffer from High Prices, Lack of Infrastructure
Hydrogen Hurdles
Hydrogen-powered Car Makers Suffer from High Prices, Lack of Infrastructure
  • By Jung Min-hee
  • May 28, 2015, 03:15
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The layout of a typical hydrogen fuel cell-using car.
The layout of a typical hydrogen fuel cell-using car.

 

The big two auto makers that seek to dominate the hydrogen-powered car market, Hyundai Motor and Toyota, are struggling to expand supply.  

Even though hydrogen-powered vehicles have enough potential to be called the “ultimate eco-friendly car,” they have difficulties in spreading due to high cost and a lack of proper infrastructure. In particular, Hyundai Motor is suffering more because of less government funding in comparison with Japan.

According to industry sources, Toyota currently sells the Mirai fuel cell vehicle at a price of US$57,500 (62.34 million won) in the U.S. It is almost twice as expensive as an average medium-sized sedan. When leasing the Mirai, consumers should pay US$499 (540,000 won) a month. Based on the lease price, it is almost three times higher than that of Toyota’s new Corolla.

Hyundai Motor sells the Tucson ix for 85 million won (US$76,937) in the domestic market. The company lowered its price by 43.3 percent from the previous price of 150 million won (US$135,771). However, individual customers do not purchase the model, since they cannot receive subsidies from the government. The Tucson ix is available at the price of US$499 (551,295 won) a month with a deposit of US$2,999 (3.31 million won) in the U.S.

A U.S. market research firm City Research said, “Hydrogen-powered vehicles have lower price competitiveness than internal combustion locomotives, and this gap is getting wider due to prolonged low oil prices. They, including the Mirai, will not have much influence in the auto market until 2020.”

A hydrogen vehicle is a vehicle that generates electricity by reacting hydrogen with oxygen in a fuel cell for motive power. Since it does not emit any exhaust gases and pollutants except for water, the vehicle is considered the ultimate stage of the evolution of eco-friendly vehicles.

Releasing the Tucson ix in 2013, Hyundai Motor established the mass production system of hydrogen vehicles for the first time in the world. In 2010, the Korean government encouraged the company to dominate the related market in advance by presenting a “Green Car Development Road Map,” and it led to the birth of the world’s first hydrogen vehicle in Korea. However, a concrete development plan has not come up for five years since then, obstructing supply expansion. State funding this year also dropped by 150 million won (US$1.36 million) to 200 million won (US$1.81 million) from 350 million won (US$3.17 million) last year. Moreover, there is no plan to expand hydrogen energy stations within this year. Without proper infrastructure, it is only fair that consumers do not buy hydrogen vehicles. It is estimated that the company sold only 200 cars of the Tucson ix at home and abroad for a year and a half.

An official from Hyundai Motor said, “Whether to build infrastructure or not, it is hard to expect that the Tucson model would sell well at the market price of 85 million won [US$76,937]. Only when an effective competition system is established with long-term expansion of infrastructure and government support will the related market be formed.”

Toyota has similar worries but its situation is better than that of Korea. The Japanese government supports up to 280 million yen (US$2.28 million or 2.54 million won) per hydrogen station in subsidy. Currently, there are 20 private stations in Japan. The country plans to supply 5 million hydrogen cars by 2020. The government provides subsidies of US$25,000 (27.13 million won) per unit. An official from the industry said, “In the North American market, there will be fierce competition with the release of the Honda FCX Clarity, and new models of Fiat Chrysler. If Korea loses out in the hydrogen vehicle market as well as electric vehicle market, it will be hard for the country to secure its competitiveness in the future eco-friendly vehicle sector.”